Airway and lung organoids derived from human-induced pluripotent stem cells (hiPSCs) are current models for personalized drug screening, cell–cell interaction studies, and lung disease research. We analyzed the existing differentiation protocols and identified the optimal conditions for obtaining organoids. In this article, we describe a step-by-step protocol for differentiating hiPSCs into airway and lung organoids. We obtained airway and lung organoids from a healthy donor and from five donors with cystic fibrosis. Analysis of the cellular composition of airway and lung organoids showed that airway organoids contain proximal lung epithelial cells, while lung organoids contain both proximal and distal lung epithelial cells. Forskolin-induced swelling of organoids derived from a healthy donor showed that lung organoids, as well as airway organoids, contain functional epithelial cells and swell after 24 h exposure to forskolin, which makes it a suitable model for analyzing the cystic fibrosis transmembrane conductance regulator (CFTR) channel conductance in vitro. Thus, our results demonstrate the feasibility of generating and characterizing airway and lung organoids from hiPSCs, which can be used for a variety of future applications.